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Barclays, Stanchart complete deal

NAIROBI, Kenya, Jul 15 – The handover of the custody business from Barclays Bank to Standard Chartered Bank has been finalised.

Standard Charted will now oversee the pan-African securities and custodian business in eight African markets including Botswana, Ghana, Kenya, Mauritius, Tanzania, Uganda, Zambia and Zimbabwe.

The bank indicated the gross asset value of the transaction to be approximately $3 million and customer assets under custody approximately $6.2 billion, at the end of 2009.

Speaking during a customer welcome event on Thursday, Standard Chartered Kenya Chief Executive Officer Richard Etemesi said current assets under custody are estimated at Sh3.3 billion for local and foreign clients, and there was increased demand from clients for investment services.

“The bank is now in a position to rapidly develop the custody capabilities in our core markets in Africa. We’re already seeing increased demand for regional and international investment services across the region as we remain committed to providing clients with an integrated set of solutions that promote the growth of this industry,” he said.

The Sh2.5 billion deal that began in April last year has seen Standard Chartered gain over 300 clients under the custody business.

Mr Etemesi said the recent economic crisis has presented challenges for the financial sector, prompting investors to seriously consider securing their assets.

“Investors are now thinking about the safety of their assets now even more than before, while regulators are also tightening regulations around custodian business, with risk-based regulations at the forefront. Diversification, risk, transparency have become the main consideration for investors,” he said.

Also speaking at the event, Retirement Benefits Authority (RBA) CEO Edward Odundo urged Standard Chartered and other custodian banks to review their costs.

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“As a start, everyone will say the costs are high, but the industry has grown to the extent that now, we think, they can review their costs. As an authority we urge you to review custodial costs on scheme management given the current economy,” he said.

Mr Odundo added that given the tremendous growth in the industry such a move would be timely.

“Today, the pension industry controls close to Sh451 billion. You can see the growth within 10 years from Sh40 billion to Sh451 billion. Even at 10 percent return, you can see the industry growing faster.”

With Standard Chartered controlling close to 41 percent of the market share, Mr Odundo said in order for the bank to retain its position as the market leader it would have to enhance its service delivery and ensure safekeeping facilities for schemes, assets and titles.

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